Billionaire Stanley Druckenmiller Loads Up On Gold, Makes It His Largest Position For First Time Ever

Over the past several years, one of the biggest critics of the Fed's ruinous monetary policy has been billionaire investor Stanley Druckenmiller, who in 2010 announced he would be shutting down his legendary Duquesne Capital Management, and convert it to a family office. Yet, despite his constant drumbeat of warnings that the period of ZIRP/QE/NIPR will end in tears, he had yet to put money where his mouth was (aside for a brief period in mid-2012 when we bought a lot of GLD calls, only to unwind the almost instantly).

This ended on June 30, when following Friday's filing by the Duquesne Family Office, we learned that as of the end of Q2, the largest position for Stanley Druckenmiller was none other than gold, following the purchase of 2.9 million shares of the GLD ETF shares. In other words, as of this moment, gold amount to over 20% of Druckenmiller's total holdings.

In a world in which starved for ideas alpha-chasers do anything and everything that billionaires report they did a month and a half ago, we wonder if this marks the end of the relentless liquidation in the GLD, which recently hit a multi-year low, as a result driving the price of paper gold to multi-year lows even as physical demand has approached record levels.

So with Druckenmiller now back and strapped in for the ride, we wonder which other prominent investor will promptly follow?

Gold is considered a specie, so even if an order was given to use it, it would still not be fiat money.

Bitcoin is a virtual currency. Only advantage it has, over government issued paper fiat currencies, is that there is a theoretical limit of how much of it can be created. The downside is that there is nothing to prevent competition from anothe virtual currency.
It is about as useful as Second Life money..

MIght as well keep the chain going here: Look you guys, Drunkenmiller's not stupid. He's expecting a pop at which time he will jump right back out of GLD. I expect he's accumulating physical on the side and doesn't want anyone to know about that.

Well having an ETF lets you click the sell button just when you want to. Physical no matter if you could sell it to a dealer or high street jeweler it's a pain the arse, leaves paper trail and may (certainly in UK) involve various proofs, id's, bank transfers (not cash) etc. If you're a trader, ETF is your game and I'd bet most of these pilfer's on ZH buy ETF paper gold, selling on the up after pimping physical ownership to smocks.

Wrong, wrong and wrong. Jewelery Quarter in Birmingham and also in London - walk in, ask their buy/sell price then buy or sell for cash and walk out. Why are you trying to misinform the ZH readers who are mostly US based?

If I understand the rules correctly, he would need to become an "authorized Participant" in order to be able to redeem "baskets" of GLD into physical. GLD was created as a gold pool to facilitate the member banks' manipulation of the market, with the assistance of suckers....er, investors. Authorized Participants can redeem their shares for physical when they need it in order, say, to keep COMEX from declaring "force". The money to buy actual gold is provided by the lumpenproletariat (how do you say "muppets" in German?).

Fuck mining companies. They're corporate whores like the rest of them. And for trading the shares in for greenbacks, well, the whole point of holding physical is to not be relient on a promise to pay, which is all a dollar is.

Druckenmiller bought 2.9 million shares of GLD ETF. That's quite enough to request physical delivery -- if there were enough physical in the GLD ETF fund, which there isn't or won't be if/when he were to request delivery.

He must know this and I am sure he is permissioned for futures. Wonder why he didn't go directly to the gold futures? They settle to physical metal if that's what you want and they allow for more leverage if you are just holding the position and don't want to deal with the physical stuff plus I feel there is less counter party risk in the future vs an ETF for sure.

There is really no good reason that I can think of to buy GLD over the future if you can trade the future so maybe its against his charter? (CME website GC contract info)

The only real suckers here are the ZH-ers who get a hard on from anything that might be bullish for gold, of course after having missed an epic stock market rally and after getting clobbered over the last 3 years on precious metals.

Dame, its pretty obvious that ol' Dreck is not interested in physical. He sees this as a trading opportunity, since that is what the ETFs are for. So, unless he is playing a straddle, his opinion is that gold price will rise from here. He will sell when his target prices are met.

With regard to you question, if any ETF holder stands for delivery there will be huge resistance and delays to the request, possibly months and months of delays. Any request for delivery which could be construed as "disruptive" by the managers of the fund, can simply be denied.

If Dreck wanted physical gold in quantity he'd do better to simply buy a gold mine or negotiate a deal with a mine such that his "loans" are paid back in physical. His current ETF position is close to a third of a billion, so he should have no problem finding a productive venture to siphon physical off of the stream.

Me too on the phyz. But this one position is quite interesting in terms of a relatively radical departure from prior holdings and shows some light on the inner thunking of these types, and their assessment of where there will be positive price action.